MySale Group PLC announced a fall in interim profits as supply chain problems impacted its performance in the second quarter, while its inventory built up to a higher level than expected due to subdued demand.
Underlying profit (EBITDA) fell to A$1mln in the first half to 31 December 2021 from A$2.5mln in the same period the previous year, the online retailer said in a statement.
It said it is cautious on the outlook for the full year “in light of recent trends in trading”.
The company invested in additional own-buy inventory in the first six months, but subdued demand due to the omicron variant of coronavirus and delays in stock deliveries before Christmas meant inventory levels rose more than anticipated to A$6.1mln at end-December from A$2.6mln a year earlier, while the cash balance dropped to A$3.8mln from A$15.8mln.
MySale said it is considering financing options to manage its working capital, including reducing the inventory balance, of which over 65% is fully paid. The company is debt free.
Gross merchandise value (GMV) increased by 36% to A$86.7mln in the first half, reflecting progress in scaling the group's off-price marketplace platform, which is expected to become its largest sales channel, underpinned by the higher margin own-stock channel.
Revenues fell by 6% to A$59.7mln as a result of the changing sales mix and growth of the marketplace channel.
Gross profit grew to A$24.9mln from A$24.1mln, with gross margins improving to 41.8% from 38.1%.
"The group has worked hard to navigate recent headwinds in lower consumer demand driven by the impact of the omicron variant and supply chain challenges,” said MySale CEO Kalman Polak.
“The group's increased inventory position is of a of high quality. Notwithstanding these challenges, we remain confident and are well positioned to capitalise on the long-term opportunity for the group."
MySale shares slumped nearly 40% to 2.00p.